Verizon Reaches Agreement with Vodafone for 100% Ownership of Verizon Wireless

by Istvan Fekete on September 3, 2013

Yesterday was a big day for both Vodafone and Verizon Communications: after a decade of negotiations, the parties have proudly announced an agreement that will allow the latter to take full control of Verizon Wireless after buying Vodafone’s 45% stake in the company for $130 billion.

The transaction was unanimously approved by the board of directors of both companies, and is subject to the customary closing conditions, including the approval of the regulatory bodies the companies’ shareholders. The deal is expected to be closed in the first quarter of 2014.

The agreement is the defining event in the careers of Vittorio Colao and Lowel McAdam, CEOs of Vodafone and Verizon respectively, because they have managed to rebuild relations between the two companies, which have been strained by clashes over the Wireless divided ad who would eventually seize full ownership,

They even weighed up the possibility of combining Verizon and Vodafone before deciding that selling the stake was more beneficial for both parties.

Lowell McAdam, Verizon chairman and CEO, said: “Over the past 13 years, Verizon Wireless has been a key driver of our business strategy, and through our partnership with Vodafone, we have made Verizon Wireless into the premier wireless provider in the U.S. The capabilities to wirelessly stream video and broadband in 4G LTE complement our other assets in fiber, global IP and cloud. These assets position us for the rapidly increasing customer demand for video, machine to machine and big data. We are confident of further growth in wireless, and our business in its entirety.”

McAdam continued: “This transaction will enhance value across platforms and allow Verizon to operate more efficiently, so we can continue to focus on producing more seamless and integrated products and solutions for our customers. We believe full ownership will provide increased opportunities in the enterprise and consumer wireline markets.”

Vittorio Colao, Vodafone Group CEO, said: “This transaction allows both Vodafone and Verizon to execute on their long-term strategic objectives. Our two companies have had a long and successful partnership and have grown Verizon Wireless into a market leader with great momentum. We wish Lowell and the Verizon team continuing success over the years ahead.”

According to the publicly disclosed terms, Vodafone will get $58.9 billion in cash and $60.2 billion in Verizon stock, and another $11 billion from smaller transactions in a deal that is due to close in Q1 2014.

The agreement is one of the largest shareholder returns in Vodafone’s history. The company is said to be using part of its cash pile, roughly $9 billion, for the Project Spring network investment program and the rest will be used to pay off debt.

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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